A major supplier of french fries is cutting jobs as customers tighten their wallets due to rising prices at fast-food chains.
Lamb Weston, the largest producer of fries in North America, announced it’s closing its plant in Connell, Washington. This means 375 employees, or 4% of its workforce, will be laid off, according to last week’s earnings report.
"Restaurant traffic and frozen potato demand, relative to supply, continue to be soft," said Tom Werner, Lamb Weston president and CEO, on an earnings call. He believes this trend will continue through the rest of fiscal 2025.
He added, "We expect these actions will help us manage factory utilization and ease the supply-demand imbalance in North America." The company is also reducing operating expenses, including cutting headcount and leaving some job positions unfilled.
The company, based in Eagle, Idaho, assured Fox Business that the restructuring won’t impact supply to customers.
Fast-food chains are feeling the effects of inflation as customers, strapped for cash, visit less frequently. A survey in May showed 80% of Americans now consider fast food a "luxury" due to the higher prices.
To lure customers back, chains like McDonald’s introduced deals. McDonald’s launched a $5 Meal Deal, offering a McDouble or McChicken, nuggets, fries, and a drink.
Burger King and Wendy’s followed with similar deals, but fries demand remains low, Werner noted.
"Many of these deals have customers trading down from a medium fry to a small fry," he explained.
In the U.S., restaurant traffic dropped 2% last quarter and 3% the quarter before, compared to last year.